Thursday, 31 July 2014
Last updated 5 hours ago
Jun 2 2011 | 3:29pm ET
Citigroup's Quantitative Strategies fund may not be the only hedge fund on the chopping block at the bank.
Citi has closed the $400 million fund, which ran internal capital exclusively, as part of its effort to come into compliance with the Volcker rule, which bars proprietary trading by banks. The move is "really not a surprise," analyst Gerard Cassidy at RBC Capital Markets told TheStreet.com, given that the Dodd-Frank financial regulation law requires the bank "to get rid of prop. trading anyway. They will continue to sell or shut down funds that are part of Citigroup Holdings," the unit that includes its asset management and retail alternative investment offerings.
The bank's alternative investments business, Citi Capital Advisors, features corporate credit, emerging markets, equity, global macro, mortgage credit and municipal debt strategies, according to its Web site. The equity division, where Quantitative Strategies manager Shakil Ahmed worked, also features event-driven and financial partners teams.
"At the end of the day, with the incremental business costs, it just doesn't make sense for Citigroup to operate the fund," Todd Hagerman, an analyst at Sterne Agee & Leach, told TheStreet. "I think they will shut the whole thing down."
That's exactly what Citi says it won't do.
"Citi Capital Advisors is a highly-valued part of our core franchise," Citi spokeswoman Danielle Romero-Apsilos said. "Our platform continues to grow with substantial investor interest, including over $1.7 billion of new investor commitments in 2010 and 2011 year-to-date."
Jul 8 2014 | 10:48am ET
The surge in derivatives regulation is among the most complex challenges facing the financial services industry today. Northern Trust’s Joshua Satten recently spoke with FINalternatives to share insights into the challenges presented by new regulation and explore how the industry is responding. Read more…